Agency: Lottery- pact protest hasty as CJRW yet unsigned
The director of the Office of State Procurement on Thursday rejected a protest by Mangan Holcomb Partners against the office’s intent to award a five- year, $ 34.5 million advertising, marketing and public relations contract for the Arkansas Scholarship Lottery to CJRW.
It’s the second protest against the award that Edward Armstrong, director of the procurement office, has turned down during the past week.
A week ago, Armstrong declined to side with the
Ghidotti- Vines partnership’s protest against awarding the contract to CJRW.
Attorney Jane Duke, representing Mangan Holcomb Partners, asked Armstrong to disqualify her client’s two competitors. Mangan Holcomb is the current holder of the lottery marketing contract and began representing the lottery in July 2014. The firm finished third behind CJRW and the Ghidotti- Vines partnership in the evaluation committee’s scoring of the three proposals for the new contract.
When the lottery contract was previously available, CJRW didn’t seek the work because it was viewed internally at the firm as a conflict of interest with its work for Oaklawn Racing and Gaming in Hot Springs. Officials with CJRW and Oaklawn said last year that they did not consider there to be a conflict.
Duke maintained that CJRW should be disqualified because it did not disclose in writing its work for Oaklawn, and that GhidottiVines should be disqualified because the entity is not registered as a business with the secretary of state’s office and thus is not authorized to do business in Arkansas.
Armstrong said in a fivepage
letter to Duke that the duty to disclose a conflict of interest to the lottery is a duty of the “successful vendor” under the requirements of the request for qualifications, and “successful vendor” means the vendor who succeeds in being awarded the contract.
“At this point, there is not yet any successful vendor, only an anticipated successful vendor,” he wrote in his letter.
“Once there is a successful vendor, that vendor will have an ongoing duty to disclose, in writing, any conflict of interest to [ the lottery] within 15 days of learning of such incompatible obligations. … This is currently a future contractual obligation of the successful vendor. Until such time as a vendor is awarded a contract as a result of the [ request for qualifications], I cannot properly disqualify CJRW ( or any other participating vendor) based on the successful vendor’s future duty to disclose conflicts of interest as provided in Section 2.5. H” in the request for qualifications, Armstrong said.
Attorney Alex Gray, representing Ghidotti- Vines, also contended that CJRW failed to disclose a conflict of interest in representing Oaklawn, and he argued that the contract should be awarded to Ghidotti- Vines, which received the second- highest score. Ghidotti- Vines is a
partnership between Little Rock- based firms Ghidotti Communications and Vines Media.
In his letter to Gray, Armstrong doesn’t mention the conflict- of- interest complaint, writing instead that GhidottiVines’ proposal fails to meet requirements of the procurement office’s request for qualifications.
“Most importantly, GhidottiVines does not even appear to exist as an entity,” Armstrong said.
The contract won’t become final until legislative review of the proposed contract is completed, said Jake Bleed, a spokesman for the state Department of Finance and Administration.
The Legislature’s Joint Budget Committee may review this contract during a legislative session under state law, and the committee will decide on when and how to handle a review of the lottery contracts, said Marty Garrity, director of the Bureau of Legislative Research. State lawmakers will convene in regular session Monday.
CJRW’s actual performance, assuming CJRW becomes the successful bidder, will be evaluated by the lottery on an ongoing basis and “if CJRW fails to put the business interests of [ the lottery] first, or otherwise fails to fulfill its contractual obligations to [ the lottery, the lottery]
will be able to address those issues when and if such a time comes,” according to Armstrong. “However, prospective breaches alleged by a competitor are not proper grounds upon which to sustain a protest,” Armstrong said.
Gary Heathcott, a consultant for CJRW, said Thursday afternoon that “we have not been notified” by the Office of State Procurement of such a ruling.
“If that has happened, of course we are pleased, but we will continue to honor the instructed position of no formal comment until an agreement has been executed between CJRW and the lottery,” he said in a written statement.
“The next step is legislative approval of our proposed contract. We believe the terms that we offered will be readily accepted, as they save the state hundreds of thousands annually.”
Sharon Vogelpohl, president of Mangan Holcomb, said late Thursday afternoon that “we received the decision today and are currently discussing it with counsel.
“We do not agree with the the idea of not addressing a clear conflict of interest until after a $ 34.5 million state contract is signed and don’t completely understand the logic and rationale on which the decision is based,” she said in a written statement.